Chamber hosts economic summit

Thanks to federal spending increases and job creation, Washington County's housing market could see sustained growth, an economist told an audience of local leaders Wednesday.

"Home price appreciation here is not driven by speculation, it's driven by jobs ... because people need a place to sleep at night," said Anirban Basu, the chairman and chief executive officer of Sage Policy Group Inc., which supplies economic analysis to public- and private-sector clients.

About 200 people heard Basu's keynote address during the Hagerstown-Washington County Chamber of Commerce's third annual Economic Summit at Fountain Head Country Club.

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According to Basu and the night's first speaker, Aris Melissaratos, the secretary of the Maryland Department of Business and Economic Development, the area's economy has demonstrated strong growth.

Housing appreciation rates in Hagerstown and Washington, D.C., are among the highest in the nation, Basu said. Appreciation rates throughout Maryland and Virginia also are among the tops in the nation, in a list dominated by resort-home locales such as Hawaii and Arizona, Basu said.

With Washington's prices increasing beyond the means of median-income earners, Basu challenged the notion that Hagerstown's housing market is a bubble set to burst. Washington will continue to add federal jobs, especially in the areas of homeland security and defense, Basu predicted.

"You drive 'til you qualify for the loan," Basu quipped.

Melissaratos, a former Westinghouse executive, said the area has become a distribution hub for the mid-Atlantic region, and he joked he is hoping to make Interstate 270 a parking lot in both directions. People will commute both east and west to good jobs, he said.

The state is positioned to lead the nation's knowledge and technology economy, Melissaratos said.

"Our economy's going exceptionally well," Melissaratos said.

Basu pointed to some signs of economic slow-down. Consumer spending has declined in the last two months, while fuel costs have climbed. Fuel costs, especially heating prices, and damage from Hurricane Katrina could contribute to inflation at a time when consumers are spending more than they are earning, Basu said.

Basu said 1.6 million jobs have been added since President George W. Bush took office, but he warned research projects about 3 million service-sector jobs will be shipped overseas by 2015. For the first time, United States workers are competing for high-skill jobs with workers in low-paying countries, Basu said.

"We've never had to compete as a country with a beast like this," said Basu, who teaches at Towson University.

Basu predicted Americans someday will send their taxes overseas to be filled out by foreign accountants.

"It's coming, and our kids have to be really, really smart," Basu said.